EU Smart Contract Regulations Included in Council’s Data Act Draft

Some worry the text, a version of which was already agreed on by the European Parliament, will prove impossible to meet for most smart contracts.

AccessTimeIconMar 27, 2023 at 10:26 a.m. UTC
Updated Mar 27, 2023 at 5:29 p.m. UTC
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Smart contracts will have to contain a kill switch under a revision of the European Union’s Data Act published by the bloc’s member states on Monday.

The EU’s Council, which represents national governments, agreed on the text on Friday, and its proposals appear to echo those already favored by lawmakers at the European Parliament. The final wording of the law now has to be negotiated between the parliament and the council mediated by the European Commission, which is part of the EU's executive branch.

The proposed legislation requiring smart contracts to be able to interrupt or terminate their activity has provoked concerns in the blockchain community that the requirement would undermine what are supposed to be automated and unalterable programs.

Erik Slottner, the Swedish minister who served as chairman in the council's talks, said in a statement on Friday that the law will “allow data to flow freely within the EU and across sectors for the benefit of businesses, researchers, public administrations and society.”

In principle, the new rules apply to contracts that make data available as part of controls on smart-home appliances like fridges, but how far they actually go isn't clear.

Marina Markezic, a founder of the European Crypto Initiative, said it could be hard, if not impossible, for most smart contracts to meet the regulations as drafted by the parliament.

Thierry Breton, a senior commission official responsible for digital matters, has already indicated he doesn’t favor the lawmakers’ version, saying it inhibits the ability to set standards for smart contracts.

Edited by Sheldon Reback.


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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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